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Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
As ever, it is a pleasure to server under your chairmanship, Mr Hancock.
I am mindful that a number of colleagues have approached me to say that they are keen to speak in the debate—that is an indication of how serious the Government’s recent proposals are—so I do not propose to go into detailed background about housing benefit. The Minister, along with my hon. Friend the Member for Westminster North (Ms Buck), is one of the most expert Members of Parliament on this subject. None of us need a history lesson on housing benefit, and I hope that the Minister will focus on answering the serious points that we all need to raise.
The cap on housing benefit levels that was announced in the Budget is devastating for London and for Londoners. Only four London boroughs are completely unaffected. I do not have time to go into some important general issues to do with the provision of affordable housing, so I will instead focus on the impacts in relation to housing benefit in Hackney and more widely.
In addition to the cap on benefit levels, we will see an impact due to the local housing allowance level being limited to the 30th percentile of a local reference rent. There will also be a devastating impact due to the perverse proposal to impose a 10% cut in benefit for those who are unemployed for more than a year, which will be particularly hard for young people aged 18 to 24, who are among those hit by the highest levels of unemployment. That is a particular concern of organisations such as Catch22, which is a charity that works with young people.
More than 650,000 homes are rented in the private sector in London, so this subject touches the lives of many people. More than a third of those homes are rented to families who receive the local housing allowance. High rents in London are not a new phenomenon and are driven largely by a housing shortage. Figures provided by London Councils show that when the local housing allowance was introduced in 2008, the rent charge for three-bedroom properties in central London was £700, which is twice the level of the proposed cap. Looking further back to 2005, the then local reference rent, which excluded the top end of the market, recorded the rental market as follows: £435 a week for two-bedroom properties; £546 a week for three-bedroom properties; and £625 a week for four-bedroom properties, all of which are above the cap recently proposed—some seven years later. It seems that the Government are making decisions without looking at any evidence or at history. The lack of affordable alternatives in London meant that the previous Government’s desire to achieve a reduction in rents through the introduction of the local housing allowance was not fulfilled, because local housing allowance rates have risen as they chase the ever-increasing level of rent in the wider market.
According to a parliamentary answer, 14,000 households will be affected by the changes. The Minister has acknowledged the impact. We need him to tell us what measures will ameliorate those changes, if the Government go ahead with them. I should like the Minister to explain that figure and to say how the private rented housing market will be able to cope with the likely upheaval that it suggests. In addition, he needs to address the impact on families at a human level.
There is an assumption that people will be able to move to lower-price properties, but the pace and scale of change will present a challenge in that regard, even without the huge impact that there will be on children and families, and on low-paid workers. It is important to ask where that low-rent property will be available. It will not be available in my constituency. Will my constituents be forced to move to the borough of Barking and Dagenham, which is no doubt delightful, but not convenient for work and schools for my constituents with Hackney connections? The impact, including the social impact, on those few boroughs that will be unaffected could be huge.
For those listening to this debate who are not aware of the situation or are not from London, I point out that all central London boroughs are affected, including that covered by my constituency and that of my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott)—the whole of Hackney—as well as Barnet, Brent, Ealing, Haringey, Hounslow, Lambeth, Merton, Richmond and Wandsworth. The changes will have a particular impact in London.
It is interesting that the Government have professed their intention to get rid of the Minister for London. That is all very well, but I believe that there is a spokesman—or spokesperson—for London. However, I wonder whether the hon. Member for Wimbledon (Stephen Hammond) has been asleep on the job because it seems that this measure has been advanced without any understanding of its wider impact, particularly in London, which is the driver of our economy. The Mayor of London has also written to the Government to outline his concern.
Mr Oliver Heald (North East Hertfordshire) (Con)
Does not the hon. Lady accept that the level of housing benefit—and how it is set—affects the rental market? The National Landlords Association has said:
“Landlords will have to look at their profit and loss and decide how much they can afford to cut their rents by.”
The hon. Lady will have seen examples in the Evening Standard last night of properties being rented at almost double the market value to housing benefit tenants.
Meg Hillier
The hon. Gentleman brings me nicely to my next point, and I shall deal with his second point in a moment. Let me be clear that I am not saying that all is perfect with housing benefit, as the Minister, from his previous incarnation as an academic in this area, knows all too well. Although I have been unable to source the reference, I believe that the current Leader of House famously said, “Let housing benefit take the strain,” when a previous Government made changes following which social housing rents increased.
Ms Karen Buck (Westminster North) (Lab)
Does my hon. Friend agree that there are grave perils in establishing a policy that affects one million claimants on the basis of what we know for a fact are some 30 extreme cases of the kind quoted by the hon. Member for North East Hertfordshire (Mr Heald)?
Meg Hillier
I agree. We must not lose sight of the majority of our constituents. Good law is not made on the basis of rare exceptions.
The hon. Member for North East Hertfordshire (Mr Heald) raised an interesting point about housing benefit levels in the private rented sector. Some private landlords have been in touch with me to say that they are concerned that they will no longer wish to rent to anybody who is either in receipt of benefit or likely to be. Given the current economic situation, the group of people who are likely to be in receipt of housing benefit will grow, because many people could be affected over the next few years. We heard yesterday about cuts to the NHS, and job losses are coming from all directions. That will mean that for many people in the private rented sector who want stay in their home and their community, the only option will be to look to housing benefit to take the strain.
Meg Hillier
There is an interesting divide in the Chamber—not on party lines, but on London and rest of the country lines. Those of us who represent London see the reality of the situation. Yes, the housing benefit bill has increased, but tinkering in such a way is not the solution. The subsidy needs reform, but it is flexible, and that flexibility is useful. In the current climate, with job losses looming, we tinker with such flexibility at our peril. If wholesale reform was being proposed, we might want to look at that, but at the moment we are talking about tinkering with the system in a way that damages London.
Hywel Williams (Arfon) (PC)
We have a history of using market forces to force down rents, which clearly has not worked, as the riposte by the hon. Member for North East Hertfordshire (Mr Heald) showed.
Meg Hillier
One reason why that has not worked is housing shortages. However, the self-denying ordinance that I set out at the beginning of my speech means that I cannot talk about wider issues.
Flexibility is important, but it is being abused by the Government, who are proposing changes overnight that might be in place from this autumn—I look to the Minister to give me guidance about that. People who have signed a six-month tenancy or a tenancy with a six-month break clause, for example, will have little option but to fund that shortfall somehow, as I shall address in more detail in a moment.
There is also a proposal to link housing benefit to consumer price index inflation, which will have a big impact on tenants and landlords. Research by Shelter has shown that CPI increased by 15% between 1999 and 2007, while there was a 44% increase in average rents. Had the local housing allowance been set to increase in line with CPI in 1999, it would now be 20% below the level needed to rent the average property. Whichever way the cut is made, people on low incomes—those people are often working—or on benefits are expected to fund the shortfall from their income to stay living in their own homes.
The impact on children and families is pertinent in my constituency, because some 22% of residents are under 16 and a lot of families need homes. People often come to my surgery because they are unable to access social housing. They are advised that they should look at what can be provided in the private rented sector, and I am sure that colleagues are in a similar position. More than one million children—a third of them in London—are living in overcrowded conditions. The cap will only exacerbate that problem because families will be forced to move into smaller, cheaper properties, and perhaps to push out their teenage children as they get older so that they can afford the rent.
I need to touch on a problem in the north of Hackney—not in my constituency, but in that of my hon. Friend the Member for Hackney North and Stoke Newington—where orthodox Jewish families will be severely hit. Such families typically have more than four children, and many of them live in the private rented sector, so the limit on benefit will have a devastating impact. The council and social landlords in Hackney will be unable to take the strain, so I need answers from the Minister on how councils will be supported in dealing with that.
Of the nearly 40,000 people in Hackney currently in receipt of housing benefit, just over 9,000 live in the private rented sector. Two thirds are in receipt of benefit, but one third are working tenants, many of whom would like to continue to work but, as a result of the proposals, will find a serious shortfall between their rent and the benefit provided for it, and will have very little income to make up the difference. In the three bands for the broad rental market areas that operate in my constituency—inner east, inner north and London central—all properties with more than two bedrooms are above the Government’s proposed cap. That is ludicrous. It means that those in Hackney living in a two, three or four-bedroom property—or a larger property—will have nowhere to go. They could go out of Hackney, but there are not many boroughs they could go to. I am not entirely clear how the Government propose to ensure that people can stay living in London—and, crucially, working in London and supporting its economy—because many people need that benefit to subsidise their rent so that they are able to live locally to their jobs.
Meg Hillier
There was some agitation behind me, Mr Hancock, and I thought that my hon. Friend wanted to intervene.
We must also consider the annual reductions in housing benefit payments. I can see why the Government see that as appealing from the point of view of money, but the impact on those affected is enormous—1,642 claimants will be affected by the bedroom size proposals in my borough alone, which is devastating. Shelter has kindly done some research that shows that the average three-bedroom household in inner-east London, which is a band in my constituency, will need to find an additional £35 a week to keep a roof over their heads. I do not know how people on the minimum wage or benefits can do that. For example, how will a pensioner surviving on £98 a week find that additional £35? Perhaps they would not be in a three-bedroom property, but they would still have to find some extra money. How will someone on the minimum wage—£218 a week—find that additional money?
Almost half of local housing allowance claimants already have shortfalls of almost £100 a month. Shelter is concerned, as am I, that the cuts could push many households over the edge. I have great faith in the Minister, because he is an expert in the area, and he has a great opportunity to do something positive for housing benefit. I hope that he is not a fig leaf for the coalition’s proposals, that he will genuinely look at the problems that the proposals throw up, and that he will come back with solutions that will, at best, ameliorate those problems, or delay them while better work is done to lessen the impact.
It is rare to have a Minister who is an expert. Governments often seem to conspire to put people in office who do not know much about their subject, but in this case we have a Minister who knows what he is talking about and can make a difference. I urge him to look into the matter with all vigour. I would also like him to answer some specific questions. What is the timetable for the welfare reform Bill, and are there any plans for the implementation of its measures, should the House pass it? Were it to go through the House in the autumn at a fast pace, when would the measures be brought in?
Will the Minister look at the following matters, which would not require primary legislation through that Bill: the reduction from the median to the 30th percentile for claimants of local housing allowance; the cap for each property size; the increase in discretionary housing payment, which I will touch on in a moment; and the change to non-dependent deductions? The Government can change the rules with a stroke of the pen, as we saw in the Budget, but that stroke of the pen devastates my constituents and many others. Is the Minister planning to consult on that, because we have seen very little consultation? We have not even seen an impact assessment. Rather than having evidence-based policy, for which the Government parties pressed when they were in opposition, it seems that policy is being made before information is provided to back it up. That is not the right way to go about things, and I hope that an impact assessment will soon be forthcoming.
I must mention the discretionary housing payment in the short time I have left. The Chartered Institute of Housing has conducted an analysis that shows that the suggested additional £40 million, which to the average man or woman might sound like a lot of money, does not go very far. If it is spent solely on making up the shortfall in rents due to the proposed drop, it would support only 4% of claimants facing the drop from the 50th to the 30th percentile for one year. It is just not enough. I do not know what will happen in my borough when people turn up to the housing office looking for alternatives, having been kicked out of their private rented properties. The borough will find it difficult to deal with the private landlords with whom it already has relationships, because they will not be keen to take people on and there will not be enough social housing. I hope that the Minister will address that point.
I am confused about some of the proposals and hope that the Minister can clarify them for me. I have already mentioned the welfare reform Bill, but what is the timetable for the more general changes and for the publication of an impact assessment, and what will that impact assessment cover? What is the rationale behind the proposals? We see a Government who are joined up in their coalition, and we have talked a lot about joined-up government over the past 13 years. As a former Minister, I am aware of the challenges that that presents, but to see such a disjoint in one Department is quite extraordinary. On one hand the Secretary of State is telling social housing tenants, “Move for the work and travel around,” and on the other hand private rental tenants are being forced to move, not necessarily to where the work is, but to poorer, cheaper places. It would therefore be helpful to hear the rationale behind the proposals. Will the Minister be candid and explain what discussion he, as an expert on the matter, has had with the Secretary of State?
What transitional arrangements will be in place for affected families? Will the change be sudden, because at the moment it seems that there will be no such arrangements? What support will councils be given, particularly with regard to discretionary housing payments? What will be the impact more generally on housing needs teams, which are already stretched? What conversations has the Minister held with the Department for Communities and Local Government?
If the Government’s apparent theory is backed by action and we see an influx of tenants seeking cheaper properties, certain boroughs will be particularly badly affected, so what support will there be for those boroughs? My colleagues, undoubtedly, will want to refer to that concern. Will the Minister share with us any analysis of an impact assessment on the private rented sector? I am not sure whether that will come in the impact assessment that has been proposed, but I have already heard landlords say that they will not rent to people on benefits. Will he tell us candidly what the chances are that we will make any difference by banging the drum about that in the debate? Have the Government made up their mind? Is that the style of the new Government, or is the Minister genuinely listening?
The Conservative Mayor of London and the Labour chair of London Councils have joined together—in the spirit of coalition government, I suppose—and have written to the Government to point out the error that they have made. In seeking to grab a headline and make a saving, the Government will have a huge impact on our capital. I do not claim that housing benefit is perfect, but to change it in such a way is just not the way to proceed. Where is the voice for London in the Government? I hope that the Minister will hear what we are saying today, as many London Members are present to hammer home our points. On this occasion, I agree with Boris, which is not something that I expect to say regularly. At least we have some voice for London through him and through Mayor Jules Pipe, who chairs London Councils.
In the past, Westminster council sold homes to discourage poor people from living in the area. Now we see a Secretary of State colluding in that by depriving lower-income households of the opportunity to live in whole swathes of London, unless they qualify for social housing. We can draw our own conclusions about what is happening, and you, Mr Hancock, are experienced enough for me not to have to lay it out. The quiet man is roaring in his own way, and it is our constituents and London’s economy that will suffer.
Mr Mike Hancock (in the Chair)
Thank you for being short and to the point. Hon. Members will have to be fair to each other, because some will be squeezed out of the debate if others talk for too long.
Mr Mark Field (Cities of London and Westminster) (Con)
I congratulate the hon. Member for Hackney South and Shoreditch (Meg Hillier) on securing the debate. We have worked together on a problem in our communities concerning the Crown Estate, along with the right hon. Member for Holborn and St Pancras (Frank Dobson), and will continue to do so. I have significant sympathy with some of her concerns, particularly those that relate to London. I fear that elements of the proposals are similar to those adopted by previous Governments, of all colours, and that there is a lack of understanding on specific issues that affect the capital and that an entirely nationwide approach cannot necessarily focus on. Many people will argue that if we remove the opportunity of central London life for the unemployed or the poor, we risk losing the fundamental character of the inner city and perhaps ghettoising the outer capital where families would inevitably be placed.
A housing benefit cap is not about driving people out of London; it is about bringing rents back into the real world, and saying that a system that pays for accommodation that is well out of the reach of ordinary taxpayers is wrong. That system is largely absurd. It has been broken, and become more absurd as time goes by. I am not focusing on Daily Mail articles that appear day by day, because we all know that those exceptions do not prove the rule. None the less, they reflect some of the reality as well as the anger felt by many people who take responsibility for their lives and do not have a lot of children and then throw themselves on the mercy of the state through housing benefit or subsidised housing. There must be fairness.
London will continue to have vibrant estates, and its housing association properties and relatively cheap private sector offering will probably come within the reach of many ordinary workers when the artificially raised rents that have in part been caused by the housing benefit system fall. The issue is not just about the regulated rents of recent years, but goes back some years. There is no doubt that some rents have been artificially raised over the last few years because private landlords have known what they can get away with. That has led to some of the current absurdities.
Ms Buck
On that specific point, is the hon. Gentleman aware of the proportion of private sector tenancies in London where a claimant is on housing benefit? He is making the point that the market is distorted by housing benefit, yet housing benefit claimants make up only a small proportion of total private sector leasing, so why should that be the case?
Mr Field
It distorts the overall price level that landlords—often absentee landlords, of which there are far more—reckon they can get away with. That has a distorting effect on the rest of the free market in this area.
Westminster city council—my local authority and the hon. Lady’s—supports the cap even though the announced changes are estimated in the worst case scenario to cost local authorities some £8.1 million this year. That reflects another element of the absurdity: the expense of long-term temporary accommodation contracts that the council was encouraged to enter into under the previous cap regime.
Ms Buck
Does the hon. Gentleman agree that two years ago, when the Labour Government proposed changes to the broad market rental area that would have impacted on Westminster, the council not only opposed that and asked us to lobby against it, but said that it would seek judicial review?
Mr Field
I do. The hon. Lady and I have done work and spoken in debates here over many years, but it is absurd that there is a massive incentive for local authorities to work within that system, and that they will lose a significant amount because of the cap system.
The local connection guidelines must change because, again, there is a phenomenal incentive for people to come to London, particularly central London. It is understandable that people from established communities abroad would want to be in central London, and I share some of the concerns of Opposition Members about tampering with ideas about local connections. However, in relation to the requirement on a local authority to provide housing, it has been suggested that we consider a three-year period instead of the existing six months out of 12. There is no doubt that central London remains an extremely attractive place in which to live, and it is important to ensure that only families most in need of temporary accommodation are here.
I understand the knock-on effects—I see the hon. Member for West Ham (Lyn Brown) shaking her head. I understand that part of the difficulty is that wherever the boundary is drawn the knock-on effect will mean that in Barking, Dagenham, Newham and so on there will be many more people, and that is equally a wrong way forward to a large extent. I hope that we will implement the caps for new claimants with immediate effect, because nothing would be worse than having too long a gap, such that there would be an incentive for people to enter into long-term contracts before the cap comes into effect.
I appreciate that many hon. Members want to speak, but I want to provide a bit of balance. I am broadly supportive of what the Government are trying to do, but they must consider seriously the specific problems in London, which I am sure will be articulated elsewhere.
It is only right to put another side of the story. A housing provider in my constituency—St Mungo’s—is dedicated to providing a recovery solution for homeless people, and I have worked closely with it during my time as an MP. We know that finding employment must be part of homeless people’s recovery. St Mungo’s welcomes the Government’s promise of further support for those who live a long way from the labour market. The people it works with have many problems, which have contributed to their joblessness and homelessness. It is worried about the announcement that jobseeker’s allowance claimants will have their housing allowance cut by 10% if they have not found jobs within a year.
Many Conservative Members welcome the review of the housing benefit system, because its flaws have become glaringly obvious to those of us who frequently deal with housing cases. I probably speak for all London Members when I say that housing and immigration are the two biggest elements of our work load. Given the great financial straits facing our country, the case for reform is more compelling, but I share the concern of the hon. Member for Hackney South and Shoreditch, and I hope that the Minister will respond to it. Urgent as the need for reform is, there must be proper consultation and an emphasis on the issues particular to the capital. I fear that if we do not change the system, we risk undermining the most compelling aspect of the case for reform, which is that the measures must be primarily about fairness, with hard work rewarded and the truly vulnerable protected.
Mr Mike Hancock (in the Chair)
Order. If hon. Members who wish to speak do so for four minutes, I will be able to call nearly everyone.
Glenda Jackson (Hampstead and Kilburn) (Lab)
It is pleasure to follow the hon. Member for Cities of London and Westminster (Mr Field), and my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) who has laid out as a basis for the debate the numbers and figures. I will not reiterate what has already been established.
What I find most shocking about the Government’s proposals is that the previous Conservative Government laid out a lesson of precisely what not to do, and the present Government are intent on repeating what happened last time. The suggestion that if people are decanted from the centre of London it can thrive is absurd. The services on which we are all dependent in the city are dependent on people who work extremely hard, not unusually for the minimum wage. They will certainly never be able to afford to buy a property in London and are finding it almost impossible to rent an affordable property in London. One of my most recent constituency cases involves a man with four in his family. He earns £361 a week and his rent is £351 a week. How is that family supposed to survive?
I want to revert to my opening statement about history being rerun. Last time there was a Conservative Government, they decanted people to seaside resorts, which experienced difficulties because those people had no employment and nothing to do, and that became an increasing tragedy. This Government have said that they are committed to families. I would argue about their definition of what constitutes a family, but the basis of that argument is that children thrive best in a stable family environment. The proposal for housing benefit will destroy families.
I revert again to my history lesson. What happened was that families were placed in absolutely appalling bed-and-breakfast conditions. That will happen again, because local authorities still have a statutory duty to put a roof over the heads of children. They may either put families into bed-and-breakfast accommodation, or they may attempt to take the children into care. Will someone tell me precisely how much we will save if thousands of children are taken into local authority care and their parents are left to wander the streets? We will see an increase in the sort of homelessness that I thought so shocked all political parties that they would never allow such a situation to arise again. But it will arise again, because the Government are trying to sell to the British electorate the argument—we heard it not in harsh terms, but it has been presented by the Government—that the majority of people who claim benefit, particularly housing benefit, are scroungers and wastrels who do not want to work and are battening on the backs of the majority of hard-working British people who do not claim housing benefit. That is simply not the case. There are people who work all the hours that God sends and are still dependent on housing benefit in order to house their families.
I hope that the Minister will reply to all the questions put to him by my hon. Friend the Member for Hackney South and Shoreditch. This policy is a monstrous rush towards what I believe will be the creation of serious social damage to some of the most vulnerable people in our society. I have already mentioned children, but there are a number of pensioners in my constituency who are dependent on housing benefit. If their homes are taken away, where will they live? Many of them do not have families who can house them. Are we going to put them into a residential home? Are we going back to the good old days of the Poor Law, where a husband and wife could be separated and put in separate buildings? I know that sounds fanciful, but if the Government’s policy is carried through as they propose, I do not believe that it is extreme to see that happening.
I have not mentioned those people who claim housing benefit because they are disabled. Such disability may not always be physical; it could be a mental disability. The policy must be rethought. The Government claim to be hard but fair none the less, and they have a duty to ensure that their approach to this issue is fair.
Lastly, on landlords, I will not be the only Member of the House who has received a briefing from a landlords association that wants to see its properties turned into houses in multiple occupation. My local authority—along with every local authority in central London, I think—has instituted policies to prevent that from happening, because properties are needed that can house more than just one individual. In my constituency, we need to house larger families, and the housing stock available at the moment is utterly inadequate. The bottom line is that we as a nation should be building more homes, but the Government have put a total block on the funding available to the Homes and Communities Agency to build more properties, so that is apparently not going to happen. That is a long-term issue, but in the short term the Government must rethink this scandalous and disgraceful policy because it punishes the most vulnerable people most harshly.
Hywel Williams (Arfon) (PC)
I congratulate the hon. Member for Hackney South and Shoreditch (Meg Hillier) on securing this debate. This is not just a London problem. Most, if not all, housing policy for Wales is devolved to the Welsh Assembly Government, with the obvious exception of housing benefit. The current system of housing provision clearly fails to provide for the warm, dry, clean spaces that most people would like to live in—MPs have recently had the experience of looking for rented properties—and that has been the case for decades. I do not want to enter into a history lesson, but I became interested in housing in the ’70s and ’80s, and there is a clear contrast between housing policy in the ’40s, ’50s, ’60s and ’70s, and recent policy with its emphasis on profits, ownership and selling off assets.
There are particular circumstances in Wales. In my part of Wales, the question of housing is exacerbated by the huge number of second homes. In my constituency around Caernarfon there are enough empty properties to rehouse every homeless person and nearly everybody who lives in substandard housing. However, those houses stand empty.
The Welsh Assembly Government have been trying to do something about that problem, and in the last Parliament a legislative competence order on housing was discussed. Three Conservative MPs on the Welsh Affairs Committee turned up expressly to vote the order down—I see that they are not present in the Chamber today. They took the opportunity to vote down that provision, and the transfer of powers over this vital issue to the Welsh Assembly Government was blocked. There has now been a U-turn. The Welsh Assembly Government lack overall control over housing benefit and work on only part of the jigsaw. They work effectively and have a well-thought-out policy, but the part of housing provision that is a mess—housing benefit—is controlled from this place.
If we are to reduce the housing benefit bill in the long term, we must plan to provide proper homes of a good standard to the people who need them, and not depend on the vagaries of the market. We must build more affordable homes, and in Wales we must change the VAT system so that houses that are clearly substandard are brought up to a proper standard. VAT is charged on repairs to houses whereas it is not charged on new build. In Wales, we need to devolve power so that the Welsh Assembly Government can take full control of the issue. My question to the Minister is this: what discussions on housing benefit took place with the Welsh Assembly Government before the announcement of this policy?
Mr Andy Slaughter (Hammersmith) (Lab)
It seems a long time since the Budget, and this policy on housing was probably the worst of a number of shocks on that day, particularly for London MPs. We have had time to reflect, and we have seen a pattern of announcements. If we look at the announcement about Building Schools for the Future last week, or that about the NHS yesterday, we see a systematic attack on the welfare state, and major changes that are being done without consultation or advice. To my mind, that looks like the legal definition of recklessness—we are either giving no thought to the consequences of our actions, or we are giving thought to those consequences, but pressing on regardless. I would be interested to know whether the Minister has given this policy any thought. He has a reputation for doing that.
I do not know whether this degree of recklessness is the new politics, or whether the Conservatives expect the Liberal Democrats to hold them back. There is little sign of that at present given the rather slavish and shameless way in which the Liberal Democrats adhere to those policies, which are attacks on the poorest communities in this country. I hope that the Minister will speak not only on behalf of the Government, but on behalf of his party to explain how he can defend his actions. He would be well advised to take advice.
Citizens Advice has produced an excellent brief for this debate that claims that there will be a marked increase in poverty, debt, rent arrears and homelessness, as well as negative impacts on family relationships. The National Housing Federation has estimated that homelessness will rise by 200,000. I feel most strongly about the fact that this policy will destroy mixed communities in London. We are proud of those communities, and not only poorer people but better-off people enjoy living in places such as Shepherd’s Bush, Hammersmith and many other areas in London. Such areas have a uniqueness that is not found in many other countries in that people of all backgrounds, incomes, races and religions live together harmoniously. This policy is destroying that. It is just one way in which the Conservative party has sought to destroy the communities that I represent, but is a particularly pernicious way that will lead to the return of Rachmanism in London. It will lead to appalling housing conditions being promoted by the Government, which is something that I hoped never to see in this country. I congratulate my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) on securing this debate. As she said, this policy is full of contradictions and is driving out those people who can get work and who, to a large extent, do work in London.
Given the limited time available I will not repeat what my hon. Friend the Member for Hampstead and Kilburn (Glenda Jackson) has said, but there is a myth that people in receipt of housing benefit are scroungers and that they are staying out of work. Shelter stated:
“The vast majority of housing benefit claimants are either pensioners, those with disabilities, people caring for a relative or hardworking people on low incomes, and only 1 in 8 people who receive housing benefit is unemployed.”
There is a myth that housing benefit is generous, although half of people who receive it pay an average of £23 a week towards their rent. There is a myth that people are living in luxury. We know the stories that Tory central office plants in the Evening Standard, which is frankly a disgraceful way to pillory the millions of people who are reliant in some degree on housing benefit in this country. At present, the level of accommodation is low.
The biggest myth of all is that people choose to live in that way. Almost everybody I know who receives housing benefit would prefer to have a secure or assured tenancy in an affordable home. To give some figures, the director of finance of Hammersmith and Fulham council estimated that initially the cap would mean 750 families being unable to afford to live in the borough—I suspect many more once we have taken into account other factors, such as the six different changes. The cap alone means thousands of people not being able to live where their families live, where they have grown up, where their work is or where their children go to school. In comparison, in the past two years the Conservative council has given planning consent for only four new affordable rented homes, although even that scheme is in doubt.
Do not blame the people who are receiving housing benefit for the problem. I blame Conservative councils in particular, but also Liberal Democrat ones. [Interruption.] My hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) agrees about the Liberal Democrats. Those councils have singularly failed through the planning process and their own means to build affordable homes in London over the past five years. What I find particularly pernicious—
Mr Slaughter
I do not think that I have time—I would like to, but it would be unfair on other people.
A degree of trickery and blackmail is used by Conservative councils and, I am sure, Liberal Democrat ones—I have to include them now—to force people into the private sector. They say, “Give up your tenancy in order to get more space. If you want your families to live in more than a one-bedroom flat, move into the private sector.” I have such cases every week in my surgery. I now have to inform those people that if they do so, not only will they be in an insecure tenancy, but in a year’s time their rent will be capped and they will be forced to move out of the area altogether. They simply do not know that.
I praise the campaign that Inside Housing magazine is running on the issue, and I praise the efforts of many London MPs, but the policy needs a rethink even at this stage. The Minister needs to go back and look at the implications, which he clearly has not yet done.
Mr Oliver Heald (North East Hertfordshire) (Con)
Average earners in this country—taxpayers—take home £374 a week. Is the hon. Member for Hammersmith (Mr Slaughter) seriously arguing that they should chip in so that £2,000 a week can be spent through housing benefit for a family? He needs to wake up. The fact is that the housing market for rentals is affected by the level of housing benefit and the housing allowance. In Wolverhampton, 75% of the rental market is housing allowance. The maximum amount that can be claimed for a four-bedroom property is £693 a month and—guess what?—that is what they all go on the market at.
Mr Heald
I will give way in a moment, but first I wish to mention Blackpool. The effect of the local broad rental market area, which takes in surrounding areas such as Fylde, has been to put up all the rents in the centre of Blackpool. There are other examples, including one in yesterday’s Evening Standard showing that housing benefit rents are higher than ordinary rents. The National Landlords Association states that the effect of the change will be landlords looking at their profit and loss and deciding by how much they can afford to reduce their rents. The fact is that housing benefit and the rental market are intertwined and it is ridiculous to say otherwise.
Caroline Lucas (Brighton, Pavilion) (Green)
Does the hon. Gentleman agree that those on the lowest incomes pay most in income tax, as a percentage of their income, rather than those on higher incomes? The idea that these measures are somehow unfair to taxpayers is completely misguided.
Mr Mike Hancock (in the Chair)
Order. I urge hon. Members to consider that at least six more people have indicated that they wish to speak. If we have such a rate of interventions, they will not all get in. Please can we be fair to each other?
Lyn Brown
I am grateful, Mr Hancock. Other people would like to contribute to the debate but will probably find it impossible.
I want to make it absolutely clear that the hon. Member for North East Hertfordshire (Mr Heald) is talking about one case that has been cited in the Daily Mail, The Mail on Sunday or wherever. In Newham, in London, the rent for a five-bedroom house is £350 a week, not the ludicrous amounts that the hon. Gentleman is talking about. Perhaps he will focus his remarks on the real world, rather than the world of Notting Hill.
Mr Heald
The hon. Lady must recognise what has happened to the housing benefit budget. It has gone up in a decade from £14 billion to £21 billion, and has been pushed there the whole time. When the Work and Pensions Committee looked at the issue before the election, some people were seriously arguing that we should remove the five-bedroom cap so that someone could get a seven-bedroom house on housing benefit—there is no end to it. Someone needs to speak up for the ordinary taxpayer.
What about large families? The hon. Member for Hampstead and Kilburn (Glenda Jackson) talked about that issue in Hampstead. If ordinary working people want to have a large family, that is their individual choice, and it probably means that if they are not subsidised to a huge extent, they will be a bit more crowded and cannot live in the part of London in which they want to live. People with large families need to be more realistic about the way of the world.
Margaret Hodge (Barking) (Lab)
I want to raise the issue of the impact that this policy will have on my community in the London borough of Barking and Dagenham. Our borough has lower local housing allowance rates than the proposed cap for all but the largest properties, so only five families will be adversely affected by it, although I must add that larger families tend to be the poorer families and that the impact will be felt over time. However, that figure can be compared with the 4,592 families—some 85%—who will be over the cap in Westminster, the 2,345 in Kensington and Chelsea, the 2,360 in Brent and the 1,688 in Hackney.
We do not need to be rocket scientists to work out what will happen in practice: families will move out of the inner London boroughs to places such as Barking and Dagenham, where there will then be greater pressure on housing. Let me set out what the impact of that will be. Our borough does not have enough decent housing for local people at a price that people can afford. We have more than 11,000 people on our waiting list. Everyone in the Chamber knows the impact that a lack of affordable housing can have on people’s anger, and therefore the rise of the extreme right, and we have been grappling with that problem. I ask the Minister to think about the impact of what he is doing by moving people across the capital, and what that will mean for social cohesion, which he must care about.
There is intellectual illiteracy among some Government Members. Rents have gone up in the private sector not because of housing benefit, but because of a lack of affordable housing. Both Labour and Conservative Governments have not built enough social housing. Making housing rents in the private sector less affordable for poor families—if there are no council or housing association homes available—means that people are forced into bed-and-breakfast accommodation or back on to the streets, which will cost the taxpayer very much more than private sector housing.
Margaret Hodge
I will not give way, because loads of people wish to speak. I am not being discourteous, but do not want to be unfair to Members.
I have two other issues to raise. I am concerned about the changes to the local housing allowance. The current level of 50% of market rates is to go down to 30%, which again will disproportionately affect the largest families, who tend to be the poorest. In Barking and Dagenham, it will mean that the poorest large families will be more than £23 a week worse off. I do not believe in castrating the parents of such families to prevent them from having children. In a civilised society, our prime duty is to be fair and to look after the children of families in greatest need.
The Government also intend that, from 2013, families who have been on jobseeker’s allowance for more than 12 months will find their housing benefit cut. That will have a terrible impact on the poorest families in the community. In my borough, one in five private tenants is a JSA claimant. They tend to be people of working age, but as rents go up, the costs of being in work increase, which forces people into joblessness.
I passionately ask the Minister whether he has considered the impact of his proposed changes on social cohesion in communities across London such as mine. If so, how will he respond to the challenges that he is creating? Will he reconsider the caps to prevent such dislocation across the capital, or is the policy just another bit of political gerrymandering, as we had with the Conservative Government in the 1980s? With his background, how can he justify hitting the poorest people first? How does the cap fit with fairness? Why punish people rather than supporting them out of poverty? The Government’s proposition is ill thought out. We all want to reform housing benefit, but not in this way.
Mr Mike Hancock (in the Chair)
Order. I intend to call Damian Hinds next, and then Karen Buck and Caroline Lucas. The winding-up speeches will start at 12.10 pm. Both the Minister and the Opposition spokesperson have agreed to speak for 10 minutes each, which I hope that we can respect. We can still get five more speakers in if we play the game.
Damian Hinds (East Hampshire) (Con)
Most of us agree with the hon. Member for Hackney South and Shoreditch (Meg Hillier) that there will be difficulties for some families following the changes. It would be faintly ridiculous to have a debate in which people on one side were saying that taking money from a benefit would have an impact, but people on the other side were saying that it would not. Of course there will be an impact, and not just in London, although London is particularly affected. Many other areas will be affected, including my constituency of East Hampshire.
Most of us wish that the changes were not necessary. We wish that we were not where we are—but we are. A budget of £21 billion is bound to be examined. The question is how we proceed, and the trick is not just to cut but to try to reform and redesign in a way that smoothes off the roughest edges, that does not introduce perverse incentives, and that attempts to keep rents down. The right hon. Member for Barking (Margaret Hodge) shouted out that saying that this measure will do that is an assertion, not a fact, but it is also a basic economic law. If we take a large part of the macro-market—it does not have to be the majority of the market or all of it—and impose a limit, that will have an impact on the overall price.
The point that I really want to make is somewhat broader, however. I realise that Opposition Members would like the structural deficit that they ran up to be last week’s or last month’s debate, and now want to move on to a debate about cuts and pretend that it is a different topic altogether. In the first debate, they say, “Oh yes, we did go a little bit far in running up debts, but the real problem was caused by the bankers and the global recession,” but that glosses over the fact that we were so economically ill prepared for what came. They deliberately confuse the cyclical deficit with the structural deficit and deliberately confuse the annual deficit with the accumulated debt, thus trying to discombobulate the public. By the way, they say that they had a plan to deal with the situation, but they only ever talk about the total, and never about the individual line items that make up that total.
In the second debate, Opposition Members move on to a discussion about cuts, and for every individual line item that the present Government have to cut, they find fault with that particular approach without offering a realistic alternative. We cannot have those two separate debates. They are not separate debates, because the deficit and how it is dealt with are two sides of the same coin.
Let us be clear that with a deficit of such a size, we cannot talk only about cutting unproductive programmes and waste. We will also have to cut things that we want but simply cannot afford. If people are to be able to do the things that they want to do, they have to do the things that they must do well and responsibly, yet by running up the deficit, that is precisely what the previous Government did not do.
Many hon. Members who supported the previous Government want to see the debate in terms of so-called ideological cuts. I have seen how eager they are to suggest that there is some zeal on the part of Government Members to make such cuts because we have a strange, ill-defined antipathy towards helping people. Of course, that is nonsense. The reality is that we are trying urgently to save money—money that we do not have and never had—in the best way possible.
This is rightly a sensitive subject. As I said at the start of my speech, there will be hardship and hard cases as a result of the changes, which is why I was encouraged to learn of the increase in the discretionary housing benefit fund. I hope that that will help to mitigate some of the effects. Overall, however, given the fiscal situation that the Government have been bequeathed, I think that the changes are right and that they strike about the right balance. They cannot be considered in isolation. We must remember that people throughout society are being asked—have to be asked—to make sacrifices. I think that the changes will be seen as fair. My question is this: what representations has the Minister received from Opposition Members on how else to make cuts of a similar overall quantum in the housing benefit budget?
Mr Mike Hancock (in the Chair)
Order. There are three more Back Benchers who wish to speak. If they take five minutes each, we will be laughing.
Ms Karen Buck (Westminster North) (Lab)
William Beveridge deferred any strategy for dealing with housing costs on the ground that that could not be done while there were still significant regional variations. To paraphrase Lloyd Bentsen’s famous comment to Dan Quayle when Dan Quayle compared himself to Kennedy, “George Osborne, you are no William Beveridge.”
Our problem is that we have had a 30-year policy of shifting expenditure from the construction of affordable housing to the housing benefit budget. That includes, I have to say, decisions made by the Labour Government, which I did not agree with at the time. We are dealing with that now in the worst possible way.
Four categories of people are involved. There is a very small number of very extreme cases, which the Labour Government were planning to deal with through taking out the most expensive properties at the top of the market in the local housing allowance calculation, which was a reasonable one. We will not support such cases, but we have to have a sensible strategy for dealing with those extremes. I do not think that any Labour Member would disagree that pumping billions of pounds of taxpayers’ money into the pockets of private landlords is an insane way to go about a housing policy, but what is proposed is more insane.
I say that because of the other three categories. One is pensioners who never expected to be on housing benefit but who, many years into their private tenancy, as the rents have gone up, have found themselves caught. The second is people in the private rented sector who were working but who have lost their jobs or whose incomes have gone down and who now find that they have to claim housing benefit, possibly for a transitional period. The third category is people—families in many cases—in priority need, who either could not access social housing or were deliberately placed in the accommodation that we are talking about by local authorities. All three categories but certainly categories one and three are made up of very vulnerable people.
I have a few questions for the Minister and I would be grateful if he confirmed that he will write to all hon. Members with replies to these questions and those asked in the excellent opening speech by my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier). Can he confirm that placing homeless households in private rented accommodation was a deliberate policy of local authorities and Government, and remains so? Is he aware of how many households have been either directed to or maintained in private lettings over the past five years as a deliberate housing policy?
What proportion of households making applications and accepted by local authorities as homeless had as the main reason for their homelessness acceptance the end of an assured shorthold tenancy? I believe that it is the majority of cases; it is the main driver of homelessness.
If a household is in priority need and faces a reduction in housing benefit below the rent payable, will the local authority continue to have a homelessness duty to it? How many private tenants on housing benefit currently face a shortfall between local housing allowance and the rent charged, and what is the average amount? Hon. Friends have cited some figures. Shelter has come up with the figure of 50% of all housing benefit claimants and cited the figure of £100.
What assessment has the Department made of the numbers overall and broken down by different categories—pensioners, families with children and those of working age—and by local authority area for additional homelessness applications that are expected as a result of the policy? What assessment is being undertaken of the implications for local authorities of the movement of substantial numbers of families with children, pensioner households and others, referred to by my right hon. Friend the Member for Barking (Margaret Hodge)? I am thinking in particular of the capacity to provide school places and the implications for children’s services and adult services of dealing with large numbers of people with additional needs in a very short time scale.
Is it the Government’s intention to introduce new legislation to change the homelessness duty? What discussions are being held with local authorities about changes to the homelessness duty and the local connection criterion? Is the Minister confident that local authorities that will be the recipients of large numbers of people moved as a consequence of housing benefit changes are content to receive additional large numbers of low-income and, often, vulnerable households? What discussions have been held between the Department for Work and Pensions and the Department for Communities and Local Government about the introduction of new homelessness legislation to accommodate that difference? Will the forthcoming impact assessment indicate the Government’s confidence as to the availability of additional private rented sector housing at the reduced local housing allowance levels in all areas? What assessment has been made of the market capacity and ability to reduce rent levels?
I have a number of other questions, but I shall write to the Minister because other hon. Members want to speak. I am absolutely confident that the Department does not realise the full gravity of what is proposed.
Mr Mike Hancock (in the Chair)
I call Caroline Lucas. Please remember the time.
Caroline Lucas (Brighton, Pavilion) (Green)
I congratulate the hon. Member for Hackney South and Shoreditch (Meg Hillier) on securing the debate.
The Government’s housing benefit proposals demonstrate beyond doubt that they are intent on pursuing plans that overwhelmingly penalise the poor—forget any nice words about our being in this together. As many housing charities predict, the proposals will make thousands of people homeless, as cuts to housing benefit combine with increased repossessions and higher unemployment. It is an absolute scandal that that should happen in one of the richest countries in the world in the 21st century—what a damning judgment on what was supposed to be a new politics.
I am deeply concerned about the impact in my constituency. We have heard a lot about London, and understandably so, but I reiterate that many areas, particularly beyond London’s periphery, are also suffering a huge amount. In Brighton, Pavilion, for example, someone would have to earn more than £50,000 a year to buy an average-priced house. No wonder that nearly 10,000 households are on the waiting list for affordable housing in the Brighton and Hove area. At current rates, that list will take more than eight years to clear.
The increase in housing benefit bills over recent years is not, as the Government would have us believe, the result of some epidemic of scroungers, but, as others have said, of the considerable growth in the number of people who are being forced into the private rented sector, where rents are almost double those in social housing. Again in my own constituency, the private rented sector makes up about 21% of the housing sector, which is much higher than average. My surgeries are full of people who are already struggling to pay rent and to find alternatives to cramped, overcrowded and overpriced accommodation, and the Government’s plans can only make that worse.
If we are to reduce the housing benefit bill in the long term, we should be building more affordable housing, which should, of course, be green, decent and fuel-efficient housing. We need a reduction in VAT on repairs to encourage people to put older properties to better use and we need to support people in bringing empty properties into use. We also need to support housing co-ops and other forms of affordable housing.
In the meantime, however, the Government’s proposals will simply make the situation worse. Particularly pernicious are the proposals to reduce the percentile of local market rents used to calculate LHA from the median to the 30th percentile and to cap the maximum LHA payable for each property size. Those reforms will lead to a significant reduction in the amount of LHA received by every claimant, exacerbating widespread problems with rent shortfalls and increasing barriers to accessing accommodation. As a result, swathes of London and the south-east will simply become unaffordable for people on LHA, which is likely to push them into debt, eviction and homelessness. Behind the statistics, it is important to remember the individual families many of us see in our surgeries, whose hopes and aspirations are being wrecked every day. The Government’s proposals will simply make things worse.
We are short of time, so I will make one final point. The hon. Member for East Hampshire (Damian Hinds) talked about increasing discretionary housing payments, or the DHP budget, as an additional safety net to support the thousands of claimants who will face shortfalls once the cuts to LHA are introduced. Let us remember, however, that the Chartered Institute of Housing has undertaken analysis showing that if the additional £40 million is spent solely on making up the shortfall in rents due to the proposed drop, it will support just 4% of the claimants facing the drop from the 50th to the 30th percentile for a year.
If that were not enough, from April 2013, receipt of full housing benefit for claimants who can be expected to look for work will be time limited to 12 months and then reduced by 10%. Attaching sanctions to housing benefit is an extremely unfair way of trying to help into work claimants who could work. Indeed, after the Budget, I have to ask where the jobs are that we expect these people to find. In the context of rising unemployment, it is hugely unjust to penalise people who cannot find work, and the Government’s proposals will simply lead to an even greater increase in poverty.
Let me finish with some questions. What kind of transitional protection measures will be in place for the people affected by the Government’s proposals? Have the Government considered the knock-on costs for local authorities and the knock-on effects on the private rented sector? Finally, to reiterate an earlier point, what is the point of an impact assessment that is produced after the proposals?
Mr Mike Hancock (in the Chair)
Thank you very much. Before I call the last Back-Bench speaker, I apologise to everyone who wanted to speak but whom I could not get in. The last speaker is Emily Thornberry. It would be helpful, Emily, if you could remember that we have given an undertaking to start the winding-up speeches at 12.10 pm.
Mr Mike Hancock (in the Chair)
More than you could have hoped for, I think.
Emily Thornberry
Much more than I could possibly have hoped for, although I have to say that most of my speech will appear on my website.
[Mr Gary Streeter in the Chair]
In some areas of the country—my constituency is an obvious example—there is a serious mismatch between earnings and housing costs. The average worker in my constituency earns £20,000 a year and pays tax on that. The average rent for a two-bedroom flat in inner north London, which is not the most expensive part of my constituency, is more than £17,000 a year. That leaves an average working parent with less than £60 a week for food, clothes, travel and council tax. It is clear, therefore, that there has to be some form of intervention in areas where the rent is so high. Either we build more affordable housing—I am sure that everyone here knows and agrees that that is exactly what we should do with the money—or we intervene to subsidise rents and put people in the private market.
Mr Mark Field
This lack of building has been a problem not only over the past 13 years. Does the hon. Lady not recognise, however, that there has to be some sharing of the blame? During the past 13 years of the Labour Government, there was no substantial building, and that is the nub of the problem, particularly in central London.
Emily Thornberry
Many of us in the Chamber have been major campaigners on that issue, and I know that the hon. Gentleman is, too. I was completely outraged that the Lib Dem council in my area, which was in power for 10 years, built only one flat for social rented housing for every seven new flats that were built, which is completely inappropriate in a constituency such as mine, given the needs that it has.
Of the 850 Islington families in flats with two or more bedrooms who are claiming LHA, or housing benefit in the case of private landlords, more than half—more than 500 families—will lose benefits under the new capping rules, and some will lose more than £100 a week. Where will they go? Is there room for them in Thornbury and Yate? Will they move into cars? Where do the Government expect them to go when they lose all that money? They certainly will not be able to keep their flats.
To make an obvious point, expecting housing benefit claimants to live in the cheapest 30% of private rented flats will cause real hardship in areas such as London, where housing is already in short supply. The differential between the median and the 30th percentile might be small in some areas. For example, in central Lancashire—perhaps in Thornbury and Yate—there is less than £6 difference between a two-bedroom flat on the median and one on the 30th percentile, and people can get a family home for less than £120 a week. However, in my constituency, in Islington, the difference between the median and the 30th percentile for a two-bedroom flat is £40 a week—the difference between £330 and £290 a week. Where will people get that money? What will happen? It is fundamentally unfair to expect claimants in my constituency to make up a housing benefit gap of £40 a week when claimants elsewhere will be expected to find only £6 a week.
Frank Dobson (Holborn and St Pancras) (Lab)
Does my hon. Friend agree that officialdom clearly accepts that the cap is not fair? It suggests a cap of £340 for a three-bedroom flat, whereas the Independent Parliamentary Standards Authority allows Members from outside London £340 for a one-bedroom flat. We are being told that the going rate for a three-bedroom flat is the same as that for a single-bedroom flat.
Emily Thornberry
On a much less serious level, the representations that London MPs are making about the money that we need to run offices rely on exactly the same argument that we are putting today on behalf of the poorest and most vulnerable of our constituents. Although we all need help, they need it a great deal more.
It is unfair to expect all private tenants to compete for the cheapest properties, because private landlords will simply take the easiest families, rather than the difficult kids or the people on unemployment benefit. Where will the other families go? Will they live in cars?
I am appalled by the suggestion that the long-term unemployed should have their housing benefit cut by 10%. I am sorry to sound like a stuck record, but the effect of a 10% cut on families in London will be much more than that on families in Bradford. A 10% cut in benefit may mean £25 a week for someone in a one-bedroom flat in London, but it will be £8.60 in Bradford. It is not fair, and it is not right. The rules will affect a large number of people in the most deprived areas of London. At the moment, 1,200 Islington residents get jobseeker’s allowance or incapacity benefit for more than a year. What will they do to make up for the loss of that benefit? The idea is that they are on jobseeker’s allowance because they want to be—that they are malingerers and do not want to work. I invite the Minister —and, indeed, his boss—to come to some of my surgeries to see the reality of how people live in London.
We should build more affordable housing, provide sensible pathways to work and support families through child tax credits and child benefit. Yes, it is social engineering, but it is positive and sustainable.
Helen Goodman (Bishop Auckland) (Lab)
May I say what a pleasure it is, Mr Streeter, to serve under your chairmanship? I congratulate my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) on securing this extremely important debate.
Of course, everyone agrees on the need to tackle high rents and high payments. It is clearly not right to pay people more than £1,000 a week for housing benefit. That is why, in his March Budget, my right hon. Friend the Member for Edinburgh South West (Mr Darling) took measures to strip out the top rents; that will save the taxpayer £50 million. Before considering the current Budget measures, I have one question for the Minister: will he abolish the £15 excess as well as introducing the raft of measures included in the Red Book?
It seems to me that the coalition Government have used the small number of exceptionally high benefit payments as a ruse to cut housing benefit across the land. The truth is that only 100 households in the entire country receive housing benefit of more than £1,000 a week. In the social sector the average payment is £72 a week, and in the private rented sector it is £106.
Over the last month, the Minister has refused to answer virtually all parliamentary questions about the number of people who will lose and by how much. I see that he looks puzzled, but even yesterday he refused to answer 36 parliamentary questions. I am not sure whether he does not know how many people will be affected and what the losses will be, or he is embarrassed. I am not sure, either, which is worse.
Did Department for Work and Pensions Ministers take decisions without proper analysis? Were they ambushed by the Treasury, as we suspect? Is that why Ministers are delaying giving us the information until 23 July—in 10 days’ time? How very convenient for them. The Chief Secretary to the Treasury has refused to release data that would have allowed people to analyse the impact of the housing benefit changes. That is despite the coalition agreement saying that data will be released so that we have proper transparency.
The Minister is Pensions Minister. Is he going to tell us today how the housing benefit cuts will affect the 1.5 million old-age pensioners who now receive housing benefit? Will he confirm that, in addition to the London problems that were so eloquently described by my colleagues, more than 1 million people will lose at least £500 a year? With the help of Citizens Advice, we have discovered what the cuts will be in other parts of the country. In some places, they will be huge. A single person on the lowest shared room rate in Durham will lose £700. A single person in a one-bedroom flat in St Helens will lose £800. People in four-bedroom accommodation in Nottingham will lose £1,100. Those figures are disgraceful.
It is quite wrong for the Government to have produced distribution figures in the Red Book that completely ignore the impact on housing benefit. The rents that people are expected to survive upon in the provinces are completely ridiculous. In central Lancashire, the single-room rate is down to £44 a week. In Hull, the one-bedroom rate is down to £67 a week. In Chesterfield, a family needing four bedrooms is expected to find accommodation for £138 a week. As hon. Members have said, the abolition of the housing benefit rate for five-bedroom properties will be particularly bad for large families. What will the impact be on the various ethnic and religious groups? It will clearly be discriminatory. We know that child poverty is bad for ethnic minorities and large families. It just got a whole lot worse.
I turn to the benefit cap. My hon. Friend the Member for Hackney South and Shoreditch has not been describing the problems of people who want to live in Mayfair, but the problems of people in an ordinary part of London. The Minister must explain how it will impact on work incentives. How does he expect people to travel to jobs such as cleaning our offices or working in hotels in central London? Is he trying to reproduce the apartheid conditions seen in cities elsewhere? Certainly he is not supporting mixed communities. The way to address work incentives is not to cut benefits, but to introduce run-ons and fixed-period payments—things that we were asked to do by Crisis and Shelter and others in the voluntary sector that work with the homeless. Things will get even worse in 2012-13, when the local housing allowance switches to a consumer prices index link. The benefit will then be completely disconnected from rent levels. Had that been done in 1999, by now people would be suffering a further 20% shortfall.
Will the Minister tell us what the effect will be on families? How many will have to move? What will the effect be on homelessness? What will the effect be on the number of families in bed-and-breakfast accommodation? What will the effect be on the availability of private rented accommodation? What have the responses been of private landlords to the Government? As many hon. Members have asked, what transitional arrangements will the Government introduce?
The Government have also announced a number of measures that will particularly affect the social sector. Deductions for non-dependence, as projected by the Chartered Institute of Housing, will impact on 170,000 people, who will all lose more than £900 a year. Typically, they are people whose children are aged between 16 and 24. Another measure that will affect the social sector is the proposal to limit working-age entitlements to reflect the size of family. According to the Chartered Institute of Housing, that could affect 180,000 people, to the tune of £2,300 a year. Will the Minister tell us whether he proposes that these deductions will be made when people’s partnerships break up? Will we see women with children being forced to move because the partner has left the home? None of the social implications of the measures have been considered.
Perhaps the most vicious measure is the cutting of benefits by 10% after a claimant has been unemployed for 12 months. What possible rationale can there be for punishing the victims of the recession? Does the Minister not realise that, in London, eight people are chasing every vacancy? That cut is happening at the same time as a cut in support for those who are unemployed. It is pointlessly punitive. The CIH estimates that, overall, the measure will affect between 231,000 and 375,000 people by between £400 and £580 a year.
Has the Minister thought through the impact on lone parents? Forcing mothers of five-year-olds onto JSA will, by the Government’s own estimate—it was published in the Budget policy assumptions document—result in only 10% of lone parents getting jobs within a year. That will leave 135,000 lone parents facing housing benefit cuts in 2013-14. That is utterly appalling.
The final little sop—to increase the discretionary housing payments by £40 million—is totally inadequate. It will not deal with the hardships caused by taking £1.8 billion out of the housing benefit budget. I hope the Minister will give us some answers, and that he will undertake to rethink these draconian measures.
The Minister of State, Department for Work and Pensions (Steve Webb)
This is the first time that I have had the pleasure to serve under your chairmanship, Mr Streeter. I congratulate the hon. Member for Hackney South and Shoreditch (Meg Hillier) on raising this important issue and on giving a number of hon. Members, particularly but not exclusively from the London area, the chance to air their views, which they have done effectively.
I have been advised not to run through a whole history of housing benefit because we do not have enough time. However, I will set out some of the thinking behind the reforms. The housing benefit bill has been rising inexorably: in the past five years, we have seen a 50% real rise in the bill when the numbers have gone up by less than 20%. With £1 billion added each year, it does not take long before we are talking about serious money. The question is this: do we stand by and watch that or do we allow our constituents, who are on low wages and paying tax out of their low wages, to have a voice in this debate? A number of hon. Members said that the taxpayers’ perspective relates not just to the well-off but to low earners as well. As the hon. Member for Brighton, Pavilion (Caroline Lucas) said, if we consider the whole tax burden, the tax impact on low earners is quite substantial.
What we cannot do is to continue to pay out blank cheques to private landlords—this is a blank cheque not to tenants but to private landlords. Rents have been going up and the state has been a passive observer. The housing market has demanded cash from us and we have simply handed it over. Then it has demanded more and we have handed it over again.
Steve Webb
Not at the moment. I will take some interventions, but first I want to set the scene.
If we do not have a blank cheque, what do we do? What is a legitimate way to say that someone who takes a low-paid job typically chooses a rent around the 30th percentile? That number has not been plucked from the sky. If someone takes a low-paid job, they do not have an unlimited choice about where they live. They cannot live in as big a house as they would like. They are constrained in where they live. Why should our constituents who take a low-paid job with all the associated uncertainties and who have to restrict their housing choice be in a worse position than those—I do not use the words “scroungers” or “apartheid”, which have come from the Opposition Benches—who are, for example, unemployed? There is an issue about social justice.
Meg Hillier
The Minister is confusing things. In my constituency, people do not have a choice. To afford anything, they need the housing benefit top-up. That is because rent levels and the demand for property are high. If landlords do not rent to people on benefit, there will be plenty of people in the private sector who do not need benefit who will take those homes.
Steve Webb
Clearly, there is a differential impact in different parts of London; I do not dispute that for a second. Taking London as a whole, just a little under a third of properties will be available within the caps. Obviously, the figure will vary from area to area, and there are particular issues that affect central inner London.
Steve Webb
I will carry on just for now, because I want to respond to as much of the debate as I can.
The question is, how can we appropriately look at this matter? Some of the figures that have been quoted for losers assume that nothing changes and that people will go on living exactly where they are living and making the same choices, but the whole point of the reform is to have an influence on the housing market, and to try to do something about escalating rents.
Steve Webb
I will not. I want to respond to the debate in the short time that is available to me. If we allow rents to go on rising as they are doing, how can we expect people to find the work that will enable them to pay those exorbitant rents? There are not the jobs that will enable people to afford to pay those rents. If we can do something about the rents that landlords charge, more people will find it worth working. At the moment, people get no return for work.
Steve Webb
No, I will not give way. I said that I wanted to respond to the debate. [Interruption.] I am trying to respond. If I give way, I will not have time to do that.
The issue of the discretionary housing benefit was raised. We are tripling the budget; it is £20 million now and it will be £60 million in a couple of years’ time. If we spread that thinly across the country, it will not go far, which is why, when we are allocating discretionary housing benefit we will have particular regard for the places in the country and the local housing markets where the changes will have the most impact. I am sure that the constituents of many hon. Members here today will see a bigger share of the money because of the points that have been raised. That is part of the answer to the question that was raised about transitional measures. Local authorities will consider on a case-by-case basis individuals who have been severely affected by our measures and for whom moving would be most disruptive, and, in those extreme cases, provide assistance.
The hon. Member for Hackney South and Shoreditch asked about timing. It is important that I place it on the record that I need to make some corrections. Nothing happens this autumn; nothing will change until next April. We have to put regulations through the Social Security Advisory Committee, so there will be a process of consultation on the regulations. The regulations will be laid before Parliament in October or November. There will then be a further six months before anything changes. As she rightly said, those are the changes that will go through secondary legislation. Some of the longer-term changes will require primary legislation, so there will be a further process of scrutiny and consultation.
I want to address some of the specific issues raised. The hon. Lady raised the issue of the rent levels relevant to the cap in her constituency. I understand that the broad rental market for inner east London is significant. I have looked at the figures for one-bed, two-bed, three-bed and four-bed properties at the 30th percentile in her constituency, and they are all at or below the cap. I am happy to supply her with the figures.
We have had many contributions to the debate. The extraordinary word “apartheid” was used and we heard about vast numbers of people criss-crossing London. There has been an awful lot of overstatement about the actual impact of the changes, particularly given that three out of 10 private rented properties will still be available after the change within the cap.
The issue of pensioners was raised. There was some suggestion that elderly people would be particularly adversely affected. I hope that the Chamber will recall that the local housing allowance that we have been talking about today, which is used in the private rented sector, applies only to 80,000 pensioners the length and breadth of Britain. [Interruption.] There was some implication that millions of pensioners would be affected by our measures. We are talking about only a tiny number of pensioners across Britain, and many of them live in regulated tenancies, which will be protected in any case.
Steve Webb
No, I will not. Hon. Members have asked about the impact assessment, statistics and parliamentary questions. The impact assessment will be published on 23 July. There was some suggestion that that had something to do with the timing of this debate. We do not control the timing of these debates.
Steve Webb
We are publishing on 23 July to give us time to prepare the detailed statistics that the House wants to see. We know the aggregate impact, but the House wants some fine detail. I can tell the Chamber that the impact assessment will include the impact on groups at a national level, broad rental market areas, bedroom category, the availability of accommodation by broad rental market area, the households affected by caps by local authority and by Government office region, the households affected by moving to the 30th percentile and the distribution of local housing allowance and housing benefit award by case load and by housing benefit award intervals. Rather than drip-feed incomplete information, we want to give the Chamber comprehensive detailed information before the House rises for the summer recess.
One thing that is usually said in such debates is that people on housing benefit will not be able to find anywhere to rent. We have all come across anecdotal examples of that. Occasionally, landlords will not rent to people on housing benefit. [Interruption.] I hate to bring the facts to bear in this debate, but since November 2008 the number of private sector tenants on housing benefit has not fallen. It has risen by 400,000. If private landlords are not willing to rent to people on housing benefit, how come there are 400,000 more of them doing it?
Ms Buck
I refer back to my first question, which the Minister has not had time to answer. The majority of increase, according to the Department for Communities and Local Government, is in households that are placed in private rented accommodation by local authorities. That is why they have been able to access it, and they will no longer be able to access it in whole swathes of the country including London.
Steve Webb
As the hon. Lady knows—she is exceptionally knowledgeable about such matters—what is important is how the market responds to these changed incentives. If everything carries on as it is now, the reforms will have failed. We want an impact on the rental market so that we can end the situation in which people have huge rents paid for by the taxpayer that they cannot afford from the jobs they get.
Mr Gary Streeter (in the Chair)
Order. Our time for this debate has gone. We now move on to the less controversial subject of the construction of nuclear power stations. [Laughter.] Will Members leaving Westminster Hall please do so quietly?